A Welcome Jolt

Charities across the country are beginning to calculate how they, and the people they help, will benefit from the economic-stimulus bill that President Obama signed into law last week — and many are optimistic about what they see. While the legislation does not give nonprofit leaders everything they said was needed to help charities meet growing needs, it still offers billions of dollars of spending on social services, health care, and the arts.

A slew of press releases reflects the mood:

“Legislation saves Jewish federation system $1billion,” says the United Jewish Communities, an umbrella organization for Jewish social-services groups.

“Stimulus bill compromise will help save thousands of arts workers’ jobs,” proclaims Americans for the Arts, an advocacy group.

“President Obama, Congress deserve high praise for $2.1-billion in recovery package for Head Start,” says the National Head Start Association.

“This is the largest one-time investment in the 45-year history of health centers,” says the National Association of Community Health Centers, referring to $2-billion that will be available to its members.

Diana Aviv, president of Independent Sector, a national coalition of charities and foundations, calls the new spending “nothing short of extraordinary.” She praises the bill for, among other things, offering $87-billion through the end of 2010 to help states provide Medicaid, a program for low-income people that she calls the “mother’s milk” for many nonprofit groups that offer health services.

States to Distribute Money

The American Recovery and Reinvestment Act of 2009, passed by Congress this month, provides for $787-billion in spending and tax cuts designed to create or save more than three million jobs.

Much of the money will be distributed by states or cities, and some nonprofit groups are beginning to explore how to apply for it.

The Louisiana Association of Nonprofit Organizations plans to contact the state Department of Social Services and Department of Health and Hospitals, as well as the City of New Orleans, soon for guidance, says Elisabeth Gehl, the group’s New Orleans public-policy director.

“We’re really hoping that nonprofits will be considered a partner and a sector that can receive some of this funding,” she says. The stimulus law, for example, provides $1-billion for Community Development Block Grants, which provide money to states and cities for housing and neighborhood-development projects. She says charities may be able to use the money for projects in New Orleans, which is still recovering from Hurricane Katrina.

Ms. Gehl says she was also glad to see that AmeriCorps, the national-service program, got stimulus money (most of $201-million earmarked for the Corporation for National and Community Service) since “AmeriCorps members have made a significant impact in the rebuilding of New Orleans after the storms.”

The new law does not include some spending that was advocated by social-services charities to help people cope with economic hard times. It includes no money for the Low-Income Home Energy Assistance Program or for Social Services Block Grants, which give money to states to offer social services to vulnerable people — although money for both programs was included in early versions of the bill.

Furthermore, a “state fiscal stabilization fund” — designed to help state and local governments, which have been hit hard by plummeting tax revenues, avoid budget cuts — was trimmed from $79-billion, as proposed by the House, to $53.6-billion in the final bill.

That disappoints Tim Delaney, chief executive of the National Council of Nonprofits, which represents state nonprofit associations. “The needs of our state and local governments are tremendous,” he says. Because states are generally required to balance their budgets, many are cutting their contracts with nonprofit groups or falling behind in their payments, he says.

On the other hand, arts groups won a victory by getting $50-million for the National Endowment for the Arts, even though the Senate version of the bill had deleted it and some Republicans highlighted it as an example of wasteful spending. The final bill also axed language from the Senate version that would have prevented stimulus money from going to museums, theaters, or arts centers.

As a way to keep the momentum going, the Creative Coalition, an arts and entertainment advocacy group in New York, is now organizing a public-service advertising campaign. It seeks to convey to lawmakers and the public that “art is not a fringe issue,” says Robin Bronk, the group’s executive director. It “stimulates the economy, makes for better citizens, makes for a better brain trust.”

Aid for Social Services

The stimulus law also includes $50-million for a new program to strengthen charities so they can help people suffering from the economic downturn. This money comes in place of $100-million that the House proposed for the Compassion Capital Fund, a program created by President Bush to provide money to religious and other charities. It would be earmarked for “capacity-building grants” for groups with “clear and measurable goals” that are “able to evaluate the success of their program,” says a report by the House-Senate conference committee that drew up the final bill.

In another development that nonprofit groups applauded, the stimulus legislation does not include a provision passed by the House to require any organization receiving stimulus money to participate in E-Verify, a federal program designed to screen out illegal immigrants when hiring. Independent Sector and other groups opposed the measure, saying E-Verify provided inaccurate information and caused hiring delays.

Among other spending in the new law:

• $2-billion for the Neighborhood Stabilization Program, which helps states and nonprofit groups purchase and rehabilitate foreclosed properties.
• $2-billion for Child Care and Development Block Grants.
• $1-billion for Community Services Block Grants.
• $120-million to provide community-service jobs to low-income older people.
• $100-million for the Emergency Food and Shelter Program, an aid program managed by social-services charities.
• $50-million for the YouthBuild program, which provides money to nonprofit groups to train young people in construction skills.

Nonprofit leaders are planning how to accomplish their goals now that Congress is moving on to other topics beyond the stimulus plan. Independent Sector tried, but failed, to get the bill to include a $15-billion bridge-loan fund to help charities that because of the country’s financial crisis find it hard to get credit to cover lags in state payments. Ms. Aviv says the group will continue fighting for the fund, possibly within the Troubled Asset Relief Program, which was set up to bolster the country’s ailing banks, or through the regular budget process.

Mr. Delaney’s group has a different strategy. He says if Congress adopts another stimulus package — something President Obama has not ruled out — it should get more money to the states but make them pay what they owe to charities before starting new projects.

Should another stimulus effort emerge, he adds, nonprofit groups should press lawmakers to consider nonprofit construction and renovation projects when looking for “shovel-ready” infrastructure projects to create jobs. A job created to build a new Boys & Girls Club gym is as valuable as a job created to build a gym for a city parks department, Mr. Delaney says.